session 9 compensation and rewards€¦ · compensation 10 commandments how do you stack up against...

Session 9

Compensation

and

Rewards

© The Employee Engagement Group All rights reserved

9-1

Rewards vs. Recognition

Reward

• Significant o Year-end or quarterly bonus o Promotion

• Includes some sort of monetary increase

• Usually recognizes long term Recognition

• Reserved to highlight an event, episode, and/or going above and beyond

• Often includes something of value (money, time, etc.)

• ‘Thank you’ is recognition but recognizes a job well done (not necessarily above and beyond)

Quantitative Measurements (the What)

Health and Safety Cost Management

• OSHA recordable

• Lost time case rates

• Working capital management

• Non-labor cost management

Employee Engagement (for Line Managers) Client Satisfaction and Quality

• Turnover of staff

• Performance review (EDP) completion %

(Managers)

• Employee engagement survey results

• Recognition budget spent (%)

• Learning budget spent (% of payroll)

• Net promoter score

• Repeat business (%)

• Overruns and write-offs

Profitability Revenue Growth

• Budget management

• Individual profit contribution

• Utilization

• Days sales outstanding

• Opportunity backlog

• Proposal backlog

• Bookings

• Account management

• Lead generation

• Gross sales

• Net sale

Qualitative Measurements

• Teamwork

• Health & Safety Awareness

• Self-Starter

• Solution Driven

• Support of Company's Strategic

Initiatives

• Efficiency

• Cost Considerations

• Work Life Balance

• Quality

• Client Service

• Innovative


9-2

Case Study #1

Katie Mullins is finishing her first six months as a new Department Manager.

Six months ago, Katie got promoted from another division to head up this department, consisting of

a diverse team of 7 employees. Two of them, Frank and Donna, are exceptional employees.

Frank has been with the firm for 15 years and has received top pay increases every year.

Unfortunately, this has put his salary at a higher rate than his internal and external peer group.

Frank also has a huge ego, quite aware that the organization thinks very highly of him. In fact, he

has already mentioned to Katie that he is deserving of a promotion at least 2 times during her first

6 months. Donna on the other hand, is relatively junior, but continues to amaze everyone with her

performance and attitude. A couple of senior leaders have even remarked, “Donna is a keeper –

we can’t lose her!”

Aaron, Connor and Ashley are all in the middle of the pack of performers - doing their jobs without

a lot of maintenance. Aaron has recently joined Katie’s team and she had to pay him higher than

Connor and Ashley just to bring him on board, creating some equity issues as they all have similar

experiences. Connor has greater upside than he is showing, primarily due to his work-life balance

priorities as he is very involved in his kids’ sports. This means that Connor is never available to

help out with overtime. If he just put in additional hours, “he could be something special” Katie has

pondered. Ashley on the other hand, always puts in extra hours, but the quality of her work is

almost always subpar. But her attitude is so positive, people tend to put up with her mistakes.

Jacob has been with the company forever it seems, and though his performance has been

marginal for quite some time, his long tenure has resulted in him making a number of friends in

corporate. “What am I going to do with this ‘sacred cow’? Wonder if I can transfer him somewhere

else?” Katie continues to ask herself during her first 6 months leading this team.

And then there is Heather, a mistake hire if there ever was one. Katie’s predecessor even told her

that he regretted hiring her and probably should have put her on a correction action plan.

Unfortunately, her personality is so abrasive, Katie’s predecessor never had the courage to

confront her with these performance issues. In fact, she actually gave her a ‘fully satisfactory’

performance review 9 months ago.

As you close out your calendar year, you just learned that you have a 4% salary pool to work with,

and a $50,000 bonus pool (all of your employees are bonus eligible – though the plan is entirely

discretionary)

• Come up with a plan to divide both your salary pool and bonus pool. How do you base your decisions?

• What additional decisions would you make as department manager


9-3

Compensation in Today’s Business Environment

• Pay increases have been small

• Promotions have been few (slow growth and low turnover is perfect storm for status

quo)

• Hiring is just now picking up (we’ve been doing more with less)

• Bonuses have returned but smaller

• Layoffs have slowed

• Survivor anxiety/burnout continues to exist

Compensation Principles

• Compensation communicates

• Compensation is emotional

• Compensation should drive the

behavior you’re looking to drive

• Compensation should reward achievement

Generation X

employees are

most at risk


9-4

Compensation 10 Commandments How do you stack up against the 10 Commandments of Compensations?

Commandment We don’t do this well

We are exceptional

1. Frequent and transparent communication

2. Pay for performance

3. Balance of qualitative and quantitative metrics

4. Avoid the ‘peanut butter’ approach

5. Avoid greasing the squeaky wheel

6. Do not over pay base compensation

7. Hot markets and sectors are rewarded with variable pay

8. Differentiate between rewards and recognition

9. Emphasize achievement

10. Fairness

Look at what you don’t do well and identify actions you can take to improve.


9-5

Types of Bonus Programs These are some of the bonus plans that are used in organizations.

Notes

Profit sharing

Gain sharing

Spot bonus awards

Sign-on bonuses

Mission, task, or milestone bonuses

Referral bonuses

Retention bonuses

Holiday bonuses

Sales Commission

Other

Other


9-6

Potential

Per

form

ance

Assign Bonuses

Think about 10 people in your organization. If you were to assign bonuses to those 10 people, in what quadrant

would you put them?

High

X% 2X%

Low

0% X%

Low High


9-7

Case Study- A culture of mediocrity in Generico’s Geotechnical Division

Generico’s Geotechnical division was initially a small startup geotechnical engineering department that quickly took off

and became wildly successful – growing at a rate of 45% annually over the past 7 years. Because of their unique

niche, the “Great Recession” didn’t negatively impact the Geotechnical Division’s growth. Since its beginning, the

company has expanded, but is barely staying ahead of the competition. The Geotechnical Division’s line General

Manager, Howie Duet has been eager to identify the source of this dilemma, which he believes is attributed to lack of

talent. Most recently, the division has been struggling in terms of finding top talent, despite aggressive recruiting

efforts.

As a result of their continuous failure to find top talent, the Geotechnical Division’s managers have been reluctant to

let go of mediocre employees (“below average is better than another open req!”) as they fear adding to their open

positions. While a large majority of employees in this division meet their current job requirements, there are many who

are delivering the bare minimum of what is expected of them (disengaging the high performers!).

Howie has identified this as an issue for several reasons. Not only has mediocrity been accepted, but it is also

beginning to impact client satisfaction. He perceives this issue as a major weakness considering it is setting the bar

for the division’s future success, while tarnishing his image with the executives of Generico Consulting. Howie

understands his division can’t achieve its goals without having talented employees.

Looking ahead, Howie is fearful of how this issue could impact his division’s market share and brand in the market

place. Not to mention his own future growth potential within Generico Consulting.


9-8

Incentive Plans

• Eligibility can vary – usually mid to senior level

• Can be designed as formulaic or discretionary

• Best plans incentivize high performance

• Best plans differentiate high and low performance

• Best senior leadership plans link metrics with company-wide results (to reduce silo behavior)

• Best mid-level plans tie payout window (timing) as close to behavior as possible

• Best plans also have both quantitative and qualitative metrics


9-9

Work Life Blending What do you do with the following work life blending ideas? What could you do? What ideas did you get from others in the workshop?

Flexible work hours Telecommuting

Vacation time Job sharing

Sabbaticals Part-time benefits

Community involvement Other

Other Other


9-10

Work Life Exercise

Rate your organization on how it views the following work life blending options. Place an X in the column that best

describes your organization’s view.

Work / Life Blending Topic We don’t offer this

We’re thinking

about this

We offer a limited version

We’re putting a

full version in place now

We offer a strong

package

Flexible Work Hours

Telecommuting

Unlimited vacation time

Job sharing

Sabbaticals

Part time benefit package

Time to do Community involvement

Other

Other

In what areas could the organization do better? What specifically could you do to help improve these areas?

What’s preventing your organization from being more focused on work life balance issues?


9-11

Evaluate your Recognition Processes

Recognition: ____________________________

Recognition: _____________________________

• How do you monitor that the reward is delivered

consistently and fairly?

• Are there audits in place? Back-up systems?

• Who delivers if you are away?

• Are there employees who are not eligible?

• Are there alternative rewards and recognitions for support staff?

• How is this valued by the employee(s)?

• Are there employees that wouldn’t value this?

• Are there consequences for receiving this recognition/reward?

• In what circumstance would this not be valuable?

• What is the specific goal or outcome this is tied to?

• How is the outcome measured?

• Is the outcome or goal evaluated and changed periodically?










• How do you monitor that the reward is delivered consistently and

fairly?




9-12

Recognition: ____________________________

Recognition: _____________________________

• How do you monitor that the reward is delivered

consistently and fairly?





















• How do you monitor that the reward is delivered consistently and

fairly?



Engagement

Action Plan

And

Session 10 Pre-Work

© The Employee Engagement Group All Rights Reserved. Session 10 Pre-Work

Use additional pages if needed. Please finish all sections and be prepared to discuss during session 10

Session 9 Action Plan

Rate your organization on how it views the following work life blending options. Place an X in the column that best

describes your organization’s view.

Work / Life Blending Topic We don’t offer this

We’re thinking

about this

We offer a limited version

We’re putting a

full version in place now

We offer a strong

package

Flexible Work Hours

Telecommuting

Unlimited vacation time

Job sharing

Sabbaticals

Part time benefit package

Time to do Community involvement

Other

Other

In what areas could the organization do better? What specifically could you do to help improve these areas?

What’s preventing your organization from being more focused on work life balance issues?

© The Employee Engagement Group All Rights Reserved. Session 10 Pre-Work

Use additional pages if needed. Please finish all sections and be prepared to discuss during session 10

Session 10 Pre-Work

– Flow chart or outline your recruiting and hiring process

– Flow chart or outline your onboarding process

– Identify how you determine ‘cultural fit’ in an interview

– Bring a job description and a resume submitted for that job to the next session

session 9 compensation and rewards€¦ · compensation 10 commandments how do you stack up against...

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